Boykin Lodging Announces Second Quarter Financial Results

CLEVELAND, Aug. 8  /PRNewswire-FirstCall/ -- Boykin Lodging Company (NYSE:BOY), a hotel real estate investment trust ("REIT"), today announced financial results for the second quarter and six months ended June 30, 2006.

Financial Highlights:

Revenue per available room (RevPAR) for the second quarter for hotels currently owned which operated during the second quarter of both 2006 and 2005 increased 3.7% to $74.01 from last year's $71.38. The increase in RevPAR was the result of an 8.2% increase in average daily room rate to $106.76 and a 3.0 point decrease in occupancy to 69.3%.

The Company's net loss attributable to common shareholders for the second quarter of 2006 totaled $1.7 million, or $0.09 per fully-diluted share, compared with the same period last year when net income totaled $6.0 million, or $0.34 per share.

Funds from operations attributable to common shareholders ("FFO") for the second quarter totaled $2.8 million, or $0.16 per fully diluted share, a decrease from second-quarter 2005 FFO of $4.1 million, or $0.23 per share. Primary contributors to the decrease in FFO included: a $0.3 million loss of lease revenue due to the sale of the San Diego Hampton Inn Sea World/Airport in the fourth quarter of 2005; a $0.2 million decline in contribution from hotel operations; a $0.6 million increase in property taxes, insurance and other expenses; and a $0.3 million decrease in interest income, all net of minority interest.  The decline in contribution from hotel operations reflected a $0.9 million increase due to improvement in hotel operating performance and a hotel acquisition, however, the year earlier period included $1.1 million of business interruption insurance recoveries which did not recur in 2006.

The Company's FFO fell short of its estimated range of $0.17 to $0.21 per fully-diluted share due to expenses incurred in connection with the signing of the merger agreement among the Company, its operating partnership and Braveheart Investors LP and its affiliates ("Braveheart").  The Company incurred approximately $2.6 million of professional fees and expenses during the second quarter related to the merger activities ($2.3 million net of minority interest).

The Company's EBITDA for the second quarter, including the Company's share of EBITDA from unconsolidated joint venture subsidiaries, totaled $7.7 million, down from last year's second quarter EBITDA of $9.4 million, primarily due to the reasons stated above.  The EBITDA change, however, is not impacted by minority interest.  FFO and EBITDA are non-GAAP financial measures that should not be considered as alternatives to any measures of operating results under GAAP.  A reconciliation of these non-GAAP measures to GAAP measures is included in the financial tables accompanying this release.

The Company and its subsidiaries sold three properties in 2005, and the operating results of the two wholly-owned properties as well as the results of the joint venture which owned the third property sold in 2005 are reflected in the financial statements as discontinued operations for all periods presented. Additionally, the Radisson Suite Beach Resort - Marco Island was classified as held for sale as of June 30, 2006 and the operating results of that hotel are also included within discontinued operations for all periods presented.  The Company acquired the Banana Bay Resort & Marina - Marathon in January 2006 through a 50% owned joint venture and the results of the operations of the resort from the acquisition date forward are reflected in the Company's consolidated financial statements.

Details of Second Quarter Results:

Revenues from continuing operations for the quarter ended June 30, 2006, were $51.3 million, compared with revenues of $51.2 million for the same period last year.  Hotel revenues for the three months ended June 30, 2006 were $51.0 million, a slight decrease from $51.1 million for the same period in 2005.  Included in second quarter 2005 hotel revenues was $1.3 million of business interruption insurance recoveries related to the two Melbourne properties, which were closed at the time.  No similar recoveries were recorded during the second quarter of 2006.  Included in 2006 hotel revenues is approximately $0.6 million related to the Banana Bay Resort & Marina, which was acquired in January of 2006.  Offsetting the decrease in hotel revenues is the inclusion of $0.2 million of revenues from condominium development and unit sales as a result of the progress made on the Captiva Villas project during 2006.

For the comparable properties, consisting of the 16 consolidated properties owned and operated under a Taxable REIT Subsidiary (TRS) structure for the second quarter of both 2006 and 2005 and included in continuing operations, excluding hotels closed due to hurricane damage, RevPAR increased 3.2% to $72.70 in 2006 from $70.47 in 2005.  Contributing to the RevPAR increase was a 7.7% increase in average daily room rate to $105.96 from $98.34, partially offset by a 3.1 point decline in occupancy to 68.6% from 71.7%.

Hotel operating profit margins, defined as hotel operating profit (hotel revenues less hotel operating expenses) as a percentage of hotel revenues, of the consolidated hotels operated under the TRS structure included in continuing operations for the second quarter of 2006 were 29.0%, a decrease from 30.3% for the second quarter of 2005.  Excluding all business interruption amounts from 2006 and 2005 and the Banana Bay Resort & Marina which was acquired during 2006, hotel operating profit margins for the portfolio increased 40 basis points to 29.9%, from 29.5% in 2005.

Year-to-date Results:

The Company's net loss attributable to common shareholders for the six months ended June 30, 2006 totaled $3.7 million versus net income of $20.7 million for the year-earlier period.  Year-to-date revenues through June 30, 2006 totaled $100.0 million, compared with $99.6 for the six months ended June 30, 2005.  Hotel revenues for the first six months totaled $98.7 million compared to $99.4 million during the first six months of 2005.  Included in hotel revenues for the first six months of 2005 was $5.3 million of business interruption insurance revenues and only approximately $21,000 of business interruption insurance recoveries was included in hotel revenues during the first six months of 2006.  Included in 2006 hotel revenues is approximately $1.1 million related to the Banana Bay Resort & Marina, which was acquired during the first quarter of 2006. Offsetting the decrease in hotel revenues is the inclusion of $1.2 million of revenues from condominium development and unit sales as a result of the progress made on the Captiva Villas project during 2006.

RevPAR for the first six months of 2006 for hotels currently owned which were operating as of June 30, 2006 increased 5.2% to $71.23 from last year's $67.72.  The increase in RevPAR was the result of a 6.2% increase in average daily room rate to $105.69 and a 0.6 point decrease in occupancy to 67.4%.

For the comparable properties, consisting of the 16 consolidated properties owned and operated under a Taxable REIT Subsidiary (TRS) structure for the first six months of both 2006 and 2005 and included in continuing operations, excluding hotels closed due to hurricane damage, RevPAR increased 4.7% to $70.30 in 2006 from $67.12 in 2005.  Contributing to the RevPAR increase was a 5.9% increase in average daily room rate to $105.06 from $99.23, partially offset by a 0.7 point decline in occupancy to 66.9% from 67.6%.

Hotel operating profit margins, defined as hotel operating profit (hotel revenues less hotel operating expenses) as a percentage of hotel revenues, of the consolidated hotels operated under the TRS structure included in continuing operations for the first six months of 2006 were 27.5%, a decrease from 30.7% for the first six months of 2005.  Excluding all business interruption amounts from 2006 and 2005 and the Banana Bay Resort & Marina which was acquired during 2006, hotel operating profit margins for the portfolio increased to 28.1%, from 27.7% in 2005.

Equity in income of unconsolidated joint ventures including gain on sale decreased by approximately $11.0 million from the first half of 2005 to 2006 as a result of the recognition, during 2005, of the Company's share of the gain on the sale of Hotel 71, which was owned by an unconsolidated joint venture.

Gain on sale/disposal of assets during the first half of 2005 totaled $6.9 million as a result of the recording of property insurance proceeds received or due to the Company in excess of the net book value of assets disposed for properties which incurred insured losses.

For the first six months of 2006, FFO of $5.0 million, or $0.28 per fully- diluted share, was below last year's FFO of $8.3 million, or $0.47 per share for the same period.  EBITDA, including the Company's share of EBITDA from unconsolidated joint venture subsidiaries, totaled $14.8 million, down from last year's EBITDA of $19.5 million.  The total expense incurred in connection with the proposed merger totaled approximately $3.3 million during the first half of 2006 ($2.8 million net of minority interest).

Capital Structure:

At June 30, 2006, Boykin had $21.7 million of cash and cash equivalents, including restricted cash, and total consolidated debt of $137.9 million. Consolidated debt includes a $7.8 million term loan related to a joint venture in which the Company owns a 50% interest.  The Company's pro rata share of the debt of unconsolidated joint ventures totaled $9.0 million at June 30, 2006.

Outlook:

Based upon our year to date results and our current booking trends, we are anticipating that the third quarter RevPAR for our entire portfolio will be 4.0% to 6.0% above the same period last year.  Net income attributable to common shareholders per share is expected to range from $1.27 to $1.31 for the third quarter.  With that assumption, we expect that our funds from operations attributable to common shareholders could range between $0.10 and $0.14 per fully-diluted share for the third quarter.  This guidance incorporates the impact of the sale of the Radisson Suite Beach Resort - Marco Island but does not incorporate any impact from further property disposition activity which may occur or the impact of the proposed merger.

Merger Agreement:

During May 2006, the Company entered into a definitive merger agreement to be acquired by Braveheart, an affiliate of Westmont Hospitality Group and Cadim Inc., a division of Caisse de depot et placement du Quebec, in a cash transaction.  In the transactions contemplated by the merger agreement, each common share of the Company will be converted into the right to receive $11.00 per share, less any pre-closing dividends, in cash.  The Company expects to pay two or more dividends prior to closing. Outstanding depositary shares, each representing a 1/10 fractional interest in a share of the Company's 10-1/2% Class A Cumulative Preferred Shares, Series 2002-A, will be converted into the right to receive a cash payment of $25.00 per share plus accrued dividends through the closing date.

Holders of common shares of the Company as of August 4, 2006 are being asked to vote on the proposed transaction at a special meeting to be held on September 12, 2006. Completion of the transaction, which is expected to occur during September 2006, is contingent on customary closing conditions and the approval of the Company's common shareholders.  Availability of financing for the mergers is not a condition to Braveheart's obligations to close.

Contemporaneously with the execution of the merger agreement, the Company entered into agreements to sell its interests in the Pink Shell Beach Resort & Spa and the Banana Bay Resort & Marina -                                       - Marathon to entities controlled by Robert W. Boykin, Chairman and Chief Executive Officer of the Company.  The total purchase price for these interests is approximately $14.6 million and will be adjusted based upon the additional capital investment and other cash flows of such interests from April 1, 2006 through the actual closing date. The closing of the sales to Mr. Boykin is contingent upon the satisfaction of the conditions to the closing of the mergers.

Dividends:

Management of the Company anticipates that it will recommend to the Board of Directors that the Company pay a dividend to common shareholders in September equal to the Company's net undistributed 2005 REIT taxable income, which it currently estimates to be approximately $0.55 per common share. Additionally, if the merger is approved by the common shareholders of the Company, pursuant to the terms of the merger agreement, the Company would pay to common shareholders a second dividend equal to the Company's remaining undistributed REIT taxable income.  Under the terms of the merger agreement, all dividends paid to common shareholders prior to the closing of the merger will reduce the $11.00 common share merger consideration.

The Company will hold a conference call with financial analysts and investors to discuss second-quarter 2006 results at 2:00 p.m. Eastern Time today, August 8, 2006.  A live webcast of the call can be heard on the Internet by visiting the Company's website at http://www.boykinlodging.com/ and clicking on the investor relations page or by visiting other websites that provide links to corporate webcasts.

The Company believes that FFO is helpful to investors as a measure of the performance of an equity REIT because it provides investors with another indication of the Company's performance prior to deduction of real estate related depreciation and amortization.  The Company believes that EBITDA is helpful to investors as a measure of the performance of the Company because it provides an indication of the operating performance of the properties within the portfolio and is not impacted by the capital structure of the REIT.

Neither FFO nor EBITDA represent cash generated from operating activities as determined by GAAP and should not be considered as an alternative to GAAP net income as an indication of the Company's financial performance or to cash flow from operating activities as determined by GAAP as a measure of liquidity, nor is it indicative of funds available to fund cash needs, including the ability to make cash distributions.  FFO and EBITDA may include funds that may not be available for the Company's discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions, and other commitments and uncertainties.

Boykin Lodging Company is a real estate investment trust that focuses on the ownership of full-service, upscale commercial and resort hotels.  The Company currently owns interests in 20 hotels containing a total of 5,637 rooms located in 13 states, and operating under such internationally known brands as Doubletree, Marriott, Hilton, Radisson, Embassy Suites, and Courtyard by Marriott among others.  For more information about Boykin Lodging Company, visit the Company's website at http://www.boykinlodging.com/.

Forward Looking Statements:

This news release contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 regarding the Company, including those statements regarding the expected effects, timing and completion of the proposed transactions, among others. Except for historical information, the matters discussed in this release are forward-looking statements that involve risks and uncertainties that may cause results to differ materially from those set forth in those statements.  For example, among other things, (1) the Company may be unable to obtain shareholder approval required for its proposed merger with Braveheart; (2) conditions to the closing of the proposed merger may not be satisfied; (3) the proposed merger may involve unexpected costs or unexpected liabilities; (4) the businesses of the Company may suffer as a result of uncertainty surrounding the proposed merger; (5) there is shareholder litigation pending against the Company and its directors with respect to the contemplated transactions; and (6) the Company may be adversely affected by economic, business, and/or competitive factors, including real estate conditions, and hotel acquisition and disposition programs.  Additional factors that may affect the future results of the Company are set forth in its filings with the Securities and Exchange Commission, which are available at http://www.boykinlodging.com/ and http://www.sec.gov/.  Unless required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Additional Information and Where to Find It:

In connection with the proposed transaction, a definitive proxy statement of Boykin Lodging Company and other materials have been filed with the SEC. INVESTORS ARE URGED TO READ THE PROXY STATEMENT AND THESE OTHER MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BOYKIN LODGING COMPANY AND THE PROPOSED TRANSACTION. Investors will be able to obtain free copies of the proxy statement (as available) as well as other filed documents containing information about Boykin Lodging Company at http://www.sec.gov/, the SEC's free website.  Free copies of Boykin Lodging Company's SEC filings are also available on Boykin Lodging Company's website, http://www.boykinlodging.com/.

Participants in the Solicitation:

Boykin Lodging Company and its executive officers and directors may be deemed, under SEC rules, to be participants in the solicitation of proxies from Boykin Lodging Company's shareholders with respect to the proposed transaction.  INFORMATION REGARDING BOYKIN LODGING COMPANY'S EXECUTIVE OFFICERS AND DIRECTORS IS SET FORTH IN THE COMPANY'S PROXY STATEMENTS FILED ON APRIL 25, 2006 AND AUGUST 4, 2006.  More detailed information regarding the identity of potential participants, and their direct or indirect interest, by securities, holdings or otherwise, are set forth in the definitive proxy statement and other material filed with the SEC in connection with the proposed transaction.

   Contact:  Tara Szerpicki
             Investor Relations
             Boykin Lodging Company
             [phone]
             



  BOYKIN LODGING COMPANY
  STATEMENTS OF OPERATIONS, FUNDS FROM OPERATIONS ATTRIBUTABLE TO COMMON
  SHAREHOLDERS, AND EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
  AMORTIZATION
  (Unaudited, amounts in thousands)

                                     Three Months Ended  Six Months Ended
                                            June 30,          June 30,
  OPERATING DATA:                        2006     2005     2006     2005
    Revenues:
      Hotel revenues:
        Rooms                          $33,808  $32,303  $65,057  $61,192
        Food and beverage               15,240   15,456   29,814   28,960
        Other                            1,977    3,352    3,806    9,276
      Total hotel revenues              51,025   51,111   98,677   99,428
      Other operating revenue               41       40       74      123
      Revenues from condominium
       development and unit sales          242        -    1,248        -
        Total revenues                  51,308   51,151   99,999   99,551
    Expenses:
      Hotel operating expenses:
        Rooms                            8,080    7,681   15,699   14,687
        Food and beverage                9,909   10,089   19,630   19,285
        Other direct                     1,343    1,379    2,650    2,676
        Indirect                        15,628   14,921   30,804   29,174
        Management fees to related
         party                           1,246    1,570    2,785    3,100
      Total hotel operating expenses    36,206   35,640   71,568   68,922
      Property taxes, insurance and
       other                             4,635    4,096    9,070    8,395
      Cost of condominium development
       and unit sales                      216        -    1,124        -
      Real estate related
       depreciation and amortization     5,179    5,470   10,393   10,941
      Corporate general and
       administrative                    3,995    3,821    7,088    6,084
        Total operating expenses        50,231   49,027   99,243   94,342

        Operating income                 1,077    2,124      756    5,209

      Interest income                       92      422      597      434
      Other income                           -        -       16        -
      Interest expense                  (2,724)  (3,015)  (5,617)  (6,198)
      Amortization of deferred
       financing costs                    (473)    (286)    (939)    (639)
      Minority interest in
       (earnings) loss of
       joint ventures                        6        -       (9)       -
      Minority interest in
       (income) loss of operating
        partnership                        561      392    1,324   (1,918)
      Equity in income of
       unconsolidated joint ventures
       including gain on sale              209       93      212   11,159

    Income (loss) before gain on
     sale/disposal of assets and
     discontinued operations            (1,252)    (270)  (3,660)   8,047

      Gain on sale/disposal of assets        6       38        6    6,914

    Income (loss) before
     discontinued operations            (1,246)    (232)  (3,654)  14,961

      Discontinued operations:
      Discontinued operations, net of
       operating partnership minority
       interest expense of $133 and
       $403 for the three and six
       months ended June 30, 2006 and
       $1,303 and $1,426 for the
       three and six months ended
       June 30, 2005, respectively         771    7,459    2,327    8,158

    Net income (loss)                    $(475)  $7,227  $(1,327) $23,119

      Preferred dividends               (1,188)  (1,188)  (2,376)  (2,376)

    Net income (loss) attributable
     to common shareholders            $(1,663)  $6,039  $(3,703) $20,743



  FUNDS FROM OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS (FFO):

                                     Three Months Ended   Six Months Ended
                                             June 30,           June 30,
                                          2006     2005     2006      2005

    Net income (loss)                    $(475)  $7,227  $(1,327)  $23,119
        Minority interest                 (434)     934     (912)    3,389
        Gain on sale/disposal of assets     (6)  (7,856)      (6)  (14,732)
        Gain on sale/disposal of assets
         included in discontinued
         operations                       (133)    (366)    (672)     (366)
        Real estate related
         depreciation and amortization   5,179    5,470   10,393    10,941
        Real estate related
         depreciation and amortization
         included in discontinued
         operations                        149      394      373     1,005
        Equity in income of
         unconsolidated joint ventures
         including gain on sale           (209)     (93)    (212)  (11,159)
        FFO adjustment related to
         joint ventures                    345      204      463      (190)
        Preferred dividends declared    (1,188)  (1,188)  (2,376)   (2,376)

    Funds from operations after
     preferred dividends                $3,228   $4,726   $5,724    $9,631
    Less: Funds from operations
     related to minority interest          430      634      763     1,292
    Funds from operations attributable
     to common shareholders             $2,798   $4,092   $4,961    $8,339

  EARNINGS BEFORE INTEREST,
   TAXES, DEPRECIATION AND
   AMORTIZATION (EBITDA):
    Operating income                    $1,077   $2,124     $756    $5,209
      Interest income                       92      422      597       434
      Other income                           -        -       16         -
      Real estate related depreciation
       and amortization                  5,179    5,470   10,393    10,941
      EBITDA attributable to
       discontinued operations             920      995    2,431     2,450
      Company's share of EBITDA of
       unconsolidated joint ventures       503      423      788       500
      EBITDA attributable to joint
       venture minority interest          (104)     (32)    (192)      (64)
    EBITDA                              $7,667   $9,402  $14,789   $19,470



  BOYKIN LODGING COMPANY
  PER-SHARE DATA
  (Unaudited)
                                     For the Three           For the Six
                                     Months Ended            Months Ended
                                       June 30,                June 30,
  PER-SHARE DATA:                  2006        2005        2006        2005

    Net income (loss)
     attributable to common
     shareholders before
     discontinued operations
     per share:
      Basic                      $(0.14)     $(0.08)     $(0.34)      $0.72
      Diluted                    $(0.14)     $(0.08)     $(0.34)      $0.71
    Discontinued operations
     per share:
      Basic                       $0.04       $0.43       $0.13       $0.47
      Diluted                     $0.04       $0.42       $0.13       $0.46
    Net income (loss)
     attributable to
     common shareholders
     per share (a):
      Basic                      $(0.09)      $0.34      $(0.21)      $1.18
      Diluted                    $(0.09)      $0.34      $(0.21)      $1.17
    FFO attributable to common
     shareholders per share:
      Basic                       $0.16       $0.23       $0.28       $0.48
      Diluted                     $0.16       $0.23       $0.28       $0.47

    Weighted average
     common shares
     outstanding - Basic     17,687,567  17,543,916  17,687,567  17,539,026
    Effect of dilutive
     securities:
      Common stock options      106,549     123,898     139,843      97,375
      Restricted share
       grants                    82,216     121,582      98,717     100,304
    Weighted average
     common shares
     outstanding - Diluted   17,876,332  17,789,396  17,926,127  17,736,705

   (a) Per share amounts may not add due to rounding.



  BOYKIN LODGING COMPANY
  SELECTED HOTEL STATISTICS and BALANCE SHEET INFORMATION
   (Unaudited, amounts in thousands except statistical data)

                                         For the Three       For the Six
                                          Months Ended       Months Ended
                                            June 30,           June 30,
                                         2006     2005      2006     2005
  HOTEL STATISTICS:

    All Hotels (17 hotels) (a)
       Hotel revenues (in thousands)   $52,870  $52,053  $101,856  $99,336
       RevPAR                           $74.01   $71.38    $71.23   $67.72
       Occupancy                         69.3%    72.3%     67.4%    68.0%
       Average daily rate              $106.76   $98.71   $105.69   $99.55

    Comparable Hotels (16 hotels) (b)
       Hotel revenues (in thousands)   $50,448  $49,831   $97,542  $95,427
       RevPAR                           $72.70   $70.47    $70.30   $67.12
       Occupancy                         68.6%    71.7%     66.9%    67.6%
       Average daily rate              $105.96   $98.34   $105.06   $99.23

   (a) Includes all hotels owned or partially owned by Boykin as of
       August 8, 2006 and for all periods presented, excluding properties
       not operating during such periods due to damage caused by hurricanes.

   (b) Includes consolidated hotels owned or partially owned by Boykin as of
       August 8, 2006 and for all periods presented and operated under the
       TRS structure, excluding properties not operating during such periods
       due to damage caused by hurricanes.



                                                     June 30,  December 31,
                                                       2006        2005
  SELECTED BALANCE SHEET INFORMATION:

    Assets
      Investment in hotel properties                 $520,377    $483,334
      Accumulated depreciation                       (146,034)   (135,667)
      Investment in hotel properties, net             374,343     347,667
      Cash and cash equivalents
       including restricted cash                       21,701      47,989
      Accounts receivable, net                          7,955       6,621
      Investment in unconsolidated joint ventures       1,412       1,410
      Other assets                                     18,795      15,524
      Assets related to discontinued operations, net   28,216      28,594
    Total Assets                                     $452,422    $447,805

    Liabilities and Shareholders' Equity
      Outstanding debt                               $137,917    $138,529
      Accounts payable and accrued expenses            46,492      38,541
      Minority interest in joint ventures               2,649         777
      Minority interest in operating partnership       13,025      13,946
      Liabilities related to discontinued operations    1,301       1,462
      Shareholders' equity                            251,038     254,550
    Total Liabilities and Shareholders' Equity       $452,422    $447,805


DATASOURCE: Boykin Lodging Company



CONTACT:  Tara Szerpicki, Investor Relations of Boykin Lodging Company,

[phone], or 



Web site:  http://www.boykinlodging.com/

Copyright